It’s difficult for anyone to file bankruptcy, but sometimes it can be the only option. Arming yourself with valuable insights helps when filing a claim. Keep reading for tips and advice from those with personal bankruptcy experience.
When you realize that you probably will file for bankruptcy, do not pay your creditors or try to avoid bankruptcy by spending all of your regular or retirement savings. Retirement funds should be avoided at all costs. You may need to withdraw some funds from your savings account, but don’t take everything that is there as you will be bereft of any financial backup if you do.
Be sure to weigh all of your options before deciding to file for personal bankruptcy. For example, if your debt is small, try a type of consumer counseling program. It is also possible to do your own debt negotiations; however, be sure to get everything in writing.
Protect your house. Filing bankruptcy does not necessarily mean that you will lose your house. It may be possible to keep your home if the value has depreciated, or there is a second mortgage. Otherwise, try looking into house exemptions that may let you remain in the home if you meet certain financial threshold requirements.
Put forth the effort to grasp the distinctions between Chapter 7 and Chapter 13 bankruptcies. There is a wealth of information online about each type of bankruptcy and their respective pluses and minuses. Ask your bankruptcy lawyer to clarify anything you don’t understand before making a final decision about which type of bankruptcy to file.
Rest assured, when you file for Chapter 13 bankruptcy, you still have the ability to take out mortgage and car loans. It is much harder. First, your trustee will have to approve the loan. Create a budget and prove you can afford a new loan payment. It will also be necessary to show why a new purchase needs to be made.
Do not put off filing for bankruptcy. Some people think that by ignoring financial problems, they will just disappear. This kind of thinking could prove to be a mistake. All your personal debts will easily go haywire, building and collapsing very quickly. This often leads to foreclosures and garnishments. When you find that you cannot take care of your debts anymore speak with an attorney for bankruptcy to talk things over.
Never take big cash advances from the credit cards that you own prior to filing for bankruptcy, even though you know that the debt will be erased. That is considered fraudulent behavior, and you can still have to pay the credit card back, bankruptcy or no.
Credit Cards
Lots of people who file for bankruptcy say they will never use credit cards again. The fallacy in this thinking is that credit is needed to improve your credit history again. Without using credit cards or other forms of credit, it is nearly impossible to rebuild your credit worthiness. The best way to help build your credit is to get one credit card and pay it off at the end of every billing cycle.
Before you file, make the choice to be fiscally reliable. Avoid running up current debts or taking on new debt just before filing for bankruptcy. Judges and bankruptcy trustees take your repayment history into account when deciding the terms of your bankruptcy. Every little bit of good financial behavior helps, so you should behave as responsibly as possible prior to filing.
Nobody enjoys filing for bankruptcy, but at times, you can’t avoid it. Now, equipped with the information from this article, you can handle the process much more completely. You can take comfort in the fact that others have been in this situation before you, so take heed from their experiences to help you deal with your own.
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